Sunday, January 30, 2005


DATE: Jan 31, 2005

The Thai government is asking the U.S. to give tsunami relief in the form of lower tuna duties and elimination of the shrimp anti-dumping duties. Negotiations, already started because of the upcoming Free Trade agreement, are continuing.

The California mudslides have caused numerous delays on the railways, affecting most ocean containers docking on the West Coast going to the East Coast via MLB (“mini-land-bridge” rail service). Union Pacific Corp declared Force Majeure on January 11, and reported a third of its capacity on the West Coast is affected.

Europe lifted some $4 billion in trade sanctions against the U.S., in exchange for legislation passed by Congress ending tax breaks ruled illegal by the WTO. The sanctions were originally imposed a year ago.

Finally, some strength for the dollar, as the dollar firmed up against the euro by about 4% over the past few weeks.

Tuna catch has been poor over the past week. Early January fish catch was good, with skipjack costs dipping slightly (even after the tsunami) to a low of just under $700. The situation however turned around over the past week, with Taiwanese catch declining and raw material costs moving up to about $750, similar to December 2004 levels. An interesting graph showing the changes in skipjack pricing over the past 18 years can be found at . It shows clearly the price spike experienced in 2004, along with the generally lower price trend of the past decade as compared to the ten years prior. Yellowfin pricing has been firming considerably more than skipjack, especially in Thailand. Several packers are now offering yellowfin at price levels even higher than tongol. Albacore is steady.

Pineapple pricing is relatively steady. Crop has been improving over the past few years, but demand has more than kept pace. Thailand, the largest supplier to the USA, continued its trend of increasing exports, while isolated brands and packers in other countries discounted pineapple during Q3 of 2004, looking to ship out old product and make up for losing market share. Current raw material cost is stubbornly high at Baht 4/kilo, up from 3.5/kilo a few months ago.

Freezing weather in china is putting a damper on mandarin production. After relative price stability for the initial packing, raw material costs are up and some packers are concerned about meeting commitments. Raw material cost is reportedly at RMB 1.40/kilo, up from only RMB 0.70 two months ago.

As reported in detail last month, market continues to firm drastically. Some packers are already estimating that extra virgin pricing could soon break through $100 per 6/1 gallon, FOB Italy.

New crop market pricing is still not finalized. Packers significantly raised their initial dollar offer prices, but market negotiations have been lowering them to more reasonable increases. On ripe olives, domestic competition should hold the line on increases to not much more than a few percent over recent levels.

While prospects remain promising for Argentina’s current new crop, pricing still clings stubbornly above price levels workable in the U.S. China, which was competitively priced, is totally sold out. Interestingly, Chinese quality this past year has been running better than that of the more established Greeks.

Canned shrimp has been ruled exempt from the anti-dumping duties causing havoc in the frozen shrimp business. The tsunami has increased tensions, as many shrimp farms/hatcheries were destroyed by the tsunami. It could be almost a year before these ponds are productive again.

Improving situation as prices fall to more reasonable levels after two years of extremely high prices. New crop continues to look promising.

With no relief around the horizon, overall market should remain tight until next pack.

There are reports of a frost in Spain affecting about 50 % of the planting area of artichokes. Production has stopped for a few weeks. Overall, the market is empty in Spain, and the U.S. market is surviving on stocks already in the country from the past Spanish and the current South American crops.